1. James M. Buchanan, "Order Defined in the Process
of its Emergence"*

Norman Barry states, at one point in his essay, that the patterns of spontaneous
order "appear to be a product of some omniscient designing mind" (p.
8). Almost everyone who has tried to explain the central principle of elementary
economics has, at one time or another, made some similar statement. In making
such statements, however, even the proponents-advocates of spontaneous order
may have, inadvertently, "given the game away," and, at the same time,
made their didactic task more difficult.

I want to argue that the "order" of the market emerges only
from the process of voluntary exchange among the participating individuals.
The "order" is, itself, defined as the outcome of the process
that generates it. The "it," the allocation-distribution result, does
not, and cannot, exist independently of the trading process. Absent this process,
there is and can be no "order."

What, then, does Barry mean (and others who make similar statements), when
the order generated by market interaction is made comparable to that order which
might emerge from an omniscient, designing single mind? If pushed on this question,
economists would say that if the designer could somehow know the utility functions
of all participants, along with the constraints, such a mind could, by fiat,
duplicate precisely the results that would emerge from the process of market
adjustment. By implication, individuals are presumed to carry around with them
fully determined utility functions, and, in the market, they act always to maximize
utilities subject to the constraints they confront. As I have noted elsewhere,
however, in this presumed setting, there is no genuine choice behavior on the
part of anyone. In this model of market process, the relative efficiency of
institutional arrangements allowing for spontaneous adjustment stems solely
from the informational aspects.

This emphasis is misleading. Individuals do not act so as to maximize utilities
described in independently existing functions. They confront genuine
choices, and the sequence of decisions taken may be conceptualized, ex post
(after the choices), in terms of "as if" functions that are maximized.
But these "as if" functions are, themselves, generated in the choosing
process, not separately from such process. If viewed in this perspective, there
is no means by which even the most idealized omniscient designer could duplicate
the results of voluntary interchange. The potential participants do not know
until they enter the process what their own choices will be. From this it
follows that it is logically impossible for an omniscient designer to
know, unless, of course, we are to preclude individual freedom of will.

The point I seek to make in this note is at the same time simple and subtle.
It reduces to the distinction between end-state and process criteria,
between consequentialist and nonconsequentialist, teleological and deontological
principles. Although they may not agree with my argument, philosophers should
recognize and understand the distinction more readily than economists. In economics,
even among many of those who remain strong advocates of market and market-like
organization, the "efficiency" that such market arrangements produce
is independently conceptualized. Market arrangements then become "means,"
which may or may not be relatively best. Until and unless this teleological
element is fully exorcised from basic economic theory, economists are likely
to remain confused and their discourse confusing.

James M. BuchananCenter for the Study of Public Choice
George Mason University (after 1983)

[I]f there is nothing unforeseen, no invention or creation in the universe,
time is useless. ... For time is here deprived of efficacy, and if it does
nothing, it is nothing. Henri Bergson[1]

There are two forms of spontaneous order theories which I wish to distinguish
in this brief note: those that relate to the origin of an aggregate structure
and those that involve the function of the structure.[2]
The common element present in all theories of the first type is the claim that
some overall social patterns or institutions are caused by a myriad of decentralized
actions that do not aim at their establishment. Theories of the second type,
however, disregard the origin of the pattern and seek, instead, to explain why
it continues in existence. These functional theories recompose the structure
in terms of the purposes it serves for the individual. Presumably, these will
explain why the individual actions that give rise to the aggregate structure
will themselves endure and hence why their product endures.

The claim I shall make is simply this: theories of spontaneous order, whether
of the first (origin) or second (function) variety, cannot be deterministic
if they are to explain economic or social processes over time.

Suppose, for example, we were to adopt the position that the causal link between
decentralized actions and social structures or orders is deterministic. Then,
on this assumption, certain initial conditions (actions 1...n) in conjunction
with a theoretical law would yield with logical necessity the structure we want
to explain. This rigid link between initial conditions and result is radical
mechanism.[3] Such explanations
cannot tell the story of how orders can arise in the course of time. Instead,
they can only provide a logical or static recomposition of an already-arisen
order. For if the connection between cause and effect is deterministic then
time literally adds nothing. Thus the aggregate structure should have already
existed from day one but it did not. By the principle of causality, then, time
must add something. This something is the future decisions and choices of the
many acting individuals. Since these decisions cannot be predicted by those
who will make them,[4] we cannot
model the individuals as foreseeing the emergent order. Hence genuine uncertainty
or "surprise" must be part of any methodological individualistic story
of the origin of social institutions.

Spontaneous order theories of the functionalist variety sometimes claim that
the function which an institution serves provides a logically sufficient explanation
of why it continues to exist. This claim is just the inversion of radical mechanism
or, simply, radical finalism.[5]
Instead of temporally antecedent events rigidly determining current institutions,
we postulate that future functions determine (or explain) them. Since individuals
act on the basis of their anticipations, it is only the future (anticipated)
functions of institutions that could possibly be relevant. Such functionalist
theories cannot, however, be evolutionary in the true sense.[6]
This is because the complete set of sufficient conditions that maintain an order
are created in the evolutionary process itself.[7]
Time must add something. In this case, what it adds is a change in individual
knowledge and the anticipation of a possibly better way of achieving one's purposes.
Thus, "order [is] defined in the process of its emergence."[8]
In retrospect, when the complete set of causes is known (at least in principle)
we might find it useful to construct a model of evolutionary process as aiming
at some determinate function. Nevertheless, this model is only a heuristic delusion
and may well lead us astray if we are not extremely careful. Ex ante
(in advance), any truly evolutionary process is itself a part of the ultimate
outcome.

The general conclusion that can be drawn from these arguments is that theories
of spontaneous order (and, a fortiori, of equilibrium) must be pattern
explanations.[9] The conjunction
of statements about initial actions and a law explains the overall pattern or
class of existing institutions rather than any specific institution. Similarly,
functional theories can rationalize the class of possible structures that will
serve a particular function rather than 'postdict' the optimal structure. As
John von Neumann and Oskar Morgenstern have said, "[T]he complete answer
to any specific problem consists not in finding a solution, but in determining
the set of all solutions."[10]

Notes

This note was stimulated by Norman Barry's thought-provoking article, "The
Tradition of Spontaneous Order," Literature of Liberty, 5 (Summer,
1982): 7-58. I am indebted to the Scaife and Earhart Foundations for support
of my research and to Mr. Bruce Majors (Graduate Department of Philosophy, Catholic
University of America) for able research assistance. Elaboration of some of
the themes in this note will appear in G. P. O'Driscoll, Jr. and M. J. Rizzo,
The Economics of Time and Ignorance (Oxford: Basil Blackwell,
forthcoming in 1983).

[6] Here the evolutionary theory
is used to explain the maintenance rather than the origin of an
order. Thus, an evolutionary principle like "survival of the fittest"
presumably can explain the maintenance of certain eating customs.

[10] John von Neumann and Oskar
Morgenstern, Theory of Games and Economic Behavior, Princeton: Princeton
University Press, 1947, p. 44.

Mario J. RizzoDepartment of Economics
New York University

3. Israel M. Kirzner, "Spontaneous Order - A Complex
Idea"

Norman Barry's richly erudite essay on the "tradition of spontaneous order"
could, I believe, have provided even more valuable historical insight with the
help of a simple yet highly significant distinction (somehow not articulated
in the essay). Barry sees the idea of spontaneous order as consisting in the
view "that most of those things of general benefit in a social system are
the product of spontaneous forces that are beyond the direct control of man."
What is not made clear in Barry's paper, however, is the circumstance that this
idea is itself made up of two quite distinct and separate ideas - each
of which is, in a way, entitled to its own (admittedly not entirely separate)
history.

Consider the position of critics of the idea of spontaneous order. Such
critics may deny the validity of the idea on either (or both) of two quite distinct
sets of grounds. (So that the affirmation of the idea of spontaneous
order presumes the refutation of both grounds.) First, critics may argue
that, in the absence of the "direct control of man," social phenomena
emerge in entirely haphazard, unsystematic fashion. For example, it may be held
that the results produced by a free market exhibit no orderliness whatsoever,
benign or otherwise. Second, it may be argued that, although analysis of decentralized,
non-controlled, freely interacting systems may indeed demonstrate the spontaneous
emergence of regularities, these regularities must, nonetheless, be judged as
carrying implications for society that are the opposite of benign. Conversely,
therefore, to uphold the idea of spontaneous order means to uphold two
ideas: (1) the idea that permitting spontaneous social forces to work themselves
out results in systematic, rather than in random or chaotic results; (2) the
idea that the normative character of these systematic results can hardly be
judged as other than socially beneficial. Clearly this second idea could have
little scope without acknowledgement of the first. But, on the other hand, acceptance
of the first idea carries with it, of itself, no commitment to the second.

Ludwig von Mises, in fact, saw the great contribution of the classical economists
in a manner not depending on the second idea at all. This contribution consisted,
Mises wrote, in the demonstration that "there prevails" in the course
of social events, "a regularity of phenomena to which man must adjust his
actions if he wishes to succeed." (Human Action, 1949, p. 2.) What
separated the great classical economists from their predecessors was that the
latter (because they "were fully convinced that there was in the course
of social events no such regularity and invariance of phenomena as had already
been found in the operation of human reasoning and in the sequence of natural
phenomena") believed "that man could organize society as he wished."
This discovery of the inherent regularities that emerge spontaneously from free
society interaction represented the major scientific breakthrough in the history
of social understanding. To be sure many of the exponents of this discovery
recognized, in addition, the benign character of these regularities.
But many (one thinks perhaps of Marx, Pigou, Keynes) have questioned the social
desirability of at least some aspects of these accepted regularities. Thus the
ranks of those skeptical of the idea of spontaneous economic order have been
swelled, in the past, not only by historicist or institutionalist critics of
the possibility of economic theory as such, but also by economic theorists who
have claimed, correctly or otherwise, to perceive theory as showing the systematic
emergence of social immoralities or social inefficiencies.

In tracing the history of the idea of spontaneous order, therefore, it would
appear of value to trace through the development of each of these two
separable components of the complex idea of spontaneous order. Precisely because
the separate components have often appeared together in integrated form, it
would be useful to trace the separable traditions from which they have emerged
over the centuries.

It will be noticed that Barry does take pains (pp. 11-12) to distinguish two
distinct senses of "spontaneous order." One refers to "a complex
aggregate structure which is formed out of the uncoerced action of individuals."
The second refers to "the evolutionary growth of laws and customs
through a ...'survival of the fittest' process" (with this second kind
of undesigned process quite possibly producing dead-ends the escape from which
might be held to call for massive centralized control). Barry's distinction
certainly presupposes the possibility, at least, of articulating the distinction
offered in this note. Our argument here, however, is that Barry's superb historical
survey could have offered an even richer yield if it were presented with explicit
attention to the historical antecedents of this latter distinction itself.

Israel M. KirznerNew York University

4. Karen I. Vaughn, "On 'The Tradition of Spontaneous
Order'"

Norman Barry (Literature of Liberty 5, Summer 1982) has hinted at a
crucial problem in Hayek's evolutionary theory of spontaneous orders. Hayek
claims that "all progress must be based on tradition," but, Barry
points out, this would seem to lead to a conclusion uncomfortable for libertarian
ideology:

The difficulty with Hayek's analysis is that social evolution does not necessarily
culminate in the classical liberalism that he so clearly favors: there are
many non-liberal institutions which have indeed survived ... . Yet if we are
intellectually tied to tradition, and if our 'reason' is too fragile an instrument
to recommend satisfactory alternatives, how are we to evaluate critically
that statist and anti-individualist order of society which seems to have as
much claim to be a product of evolution as any other structure? (p. 46)

How indeed?

The difficulty with the way Barry puts the question is that it seems to misconstrue
the purpose of theories of social evolution. Even if we agree with Hayek that
cultures evolve as the unintended and largely unconscious consequences of human
action, that carries with it no necessary implication about how one should morally
evaluate a society or a social practice. A scientific theory about how societies
do in fact evolve cannot be taken as a basis for ethical judgment without some
very carefully thought-out intervening steps. Furthermore, to say that "all
progress must be based on tradition" is not also to say that we cannot
imagine or work toward whatever idea of progress we adopt. Indeed, it may only
be possible to effect social change by starting from a firm basis in tradition,
but that says nothing about the moral worth of tradition from which we start.

The hidden premise in Hayek's work, and the source of Barry's criticism, is
the idea that evolution somehow must progress toward "the good." Yet
if evolution is a process in which the fittest survive, what are we to make
of the fact that some very unpleasant societies have survived? Hayek's way out
of that trap is to implicitly limit evolution toward "the good" to
that which evolves spontaneously as humans search to discover rules of just
behavior rather than to design them, while bad change is the product of "constructivist
rationalism." Thus Hayek gives us a way of judging different societies,
but he does not give us a scientific explanation of why spontaneous orders often
seem to lose out in the evolutionary struggle to more constructed societies.
To reply, as some of my colleagues do, that constructivist change can only win
via use of force really begs the question. Force is as much a means to achieve
ends at the disposal of human beings as is persuasion and exchange. A theory
of cultural evolution must be able to explain the change that has in fact occurred
apart from any judgments about good or bad change. Hence the question remains:
why do some cultures thrive and prosper while others wither and die? Even more
to the point, is there a natural selection process at work for human culture
analogous to the natural selection process hypothesized for the biological world?

Hayek does want to incorporate a theory of natural selection into his evolutionary
theory. For Hayek, cultures are successful because they evolve in a way that
economizes on the amount of articulated knowledge necessary for an individual
to function in that society. Those cultures survive which incorporate in their
customs and rules of behavior practices which unbeknownst to individuals in
that culture are important to their survival. While that seems a useful starting
place for a theory of natural selection among cultures, we still have no theory
about how cultural practices arise, and what kinds are "naturally selected."
Answers to both questions are crucial to the development of a full theory of
cultural evolution. They are also crucial if we want to have any chance of changing
the less than satisfactory society in which we live today.

This is not the place to attempt to develop a theory of natural selection in
cultural evolution. Instead I would like to raise some questions that such a
theory would have to address to be complete.

First of all, how do cultural practices and institutions originate? While we
can agree with Hayek that spontaneous orders arise from the unintended consequences
of human action, one imagines that the originating actions must have been intentional
in some sense. Humans act because they believe their actions have consequences.
What is the relationship between intended outcomes and unintended consequences?
To what extent are the expected results of various actions realized, and what
differentiates intentional acts that fulfill expectations from those that do
not? Are there no institutions that are the product of conscious design?
In other words, what is the role of human intentions in the establishment of
rules, customs, institutions, and political organizations?

Second, and equally important, if there is a natural selection process in cultural
evolution, what is it that gets selected? In biological evolution, success is
defined as survival of a trait in the gene pool or survival of a particular
species. By what criterion are successful cultures selected? Some might argue
that success of a culture is demonstrated by numbers of individuals surviving
in a society - a population count. But then, what demographic characteristics
describe a "larger" population? Would a population with a large number
of births and high infant mortality be considered more successful than one with
fewer births and more children surviving to adulthood? Both kinds of societies
exist today. Which is more successful? Or would a large, relatively young population
with a short life span for any one individual be considered more successful
than a smaller population where individuals live longer productive lives?

Consider another possible criterion for describing a successful society: the
ability of a society to command resources. This seems to be the implicit criterion
used by economists when they speak of successful societies. If this is truly
what "nature" selects for among cultures, then small wealthy cultures
should always be observed to win out over potentially larger but poorer cultures.
But then why do poor cultures coexist with wealthy ones, and why do poorer cultures
sometimes survive (and even defeat) very wealthy ones? Success at commanding
material resources might be a viable criterion to use as a basis for a theory
of natural selection, but if so, the full implications of the theory have yet
to be worked out.

Part of the problem with both these suggested criteria of natural selection
is that the level of analysis is wrong. We fall into the habit of thinking of
societies and political units rising and falling, winning and losing, when it
would be a great deal more fruitful to think of specific ideas or specific practices
as the substance of cultures and cultural change. In other words, a good theory,
I believe, would disaggregate the societies into the various ideas and practices
of which they are composed and view the ideas and practices as the units that
"nature" selects. This is not inconsistent with Hayek's work; he refers
to human imitation as the transmission mechanism for cultural evolution in the
same sense that genes are the transmission mechanism for biological evolution.
What humans imitate are ideas and actions, and in so far as specific actions
can be explained as ideas put into practice, it is ideas that arise, get imitated,
and either survive in the 'idea pool' or get discarded.

If we are willing to think of ideas as the units of cultural evolution, a whole
host of interesting possibilities present themselves.

For instance, how do new ideas and combinations of ideas arise, and why do
some ideas appeal to individuals enough to be "imitated" or believed
while others do not? Are there different criteria that individuals apply for
selecting among ideas? If we start from the premise that individuals choose
(in some sense) the ideas they believe, one can then take the next step of assuming
they choose ideas to fulfill purposes. But what criteria do individuals apply
to choose among competing ideas? The criteria may vary depending on the nature
of the idea. For example, technical ideas that explain how to do something to
achieve a specific end are "selected" if they actually work. They
are subject to a reality test that allows people to weed out useless ideas rather
quickly, and hence one would expect to observe progress in technical knowledge.
Moral ideas have a less obvious purpose and a very nebulous reality test; there
is no easy way to discover whether they "work" or not. Hence, progress
in moral knowledge might be as difficult to define as it is to observe. In either
case, however, the "natural selection" process is a process of human
selection among humanly inspired ideas. And the survival of the fittest becomes
a survival of ideas that human beings believe are the fittest for their
purposes.

On a more aggregated level, groups of individuals or societies have as a unifying
force a common set of ideas, an ideology, that is a composite of many smaller
sets of ideas that may or may not be consistent with each other. Survival of
the group may depend on adherence to some of those ideas but not others, but
since they are all accepted by the group as a bundle, there may be no way that
individuals can determine which are crucial; the valuable traditions are bundled
with the irrelevant. This is consistent with Hayek's view of the value of tradition.
By developing a theory of cultural evolution based on the idea as the cultural
analogue of the gene in biology, however, we might be able to develop a theory
to help us "unbundle" the ideas inherent in a tradition in a way that
will make progress toward the libertarian ideal possible.

A theory of spontaneous order is a first step, but only a first step, to understanding
the process of cultural change.

Karen I. VaughnGeorge Mason University

5. Roland Vaubel, "Comment on 'The Tradition of Spontaneous
Order'"

Norman Barry's essay is extremely valuable in at least three respects:

it describes the evolution of thought about spontaneous orders;

it contrasts various versions of rationalist and anti-rationalist libertarianism;
and

it subjects Hayek's theory to a number of revealing checks for consistency.

In my comments, I shall focus on the second and third of these aspects. In
particular, I shall criticize and supplement the answers Barry gives to the
following two questions: What is the role of reason in Hayek's theory of the
evolution of legal order? And: What is Hayek's normative criterion in evaluating
a legal order?

According to Barry, Hayek's "extreme anti-rationalism" (p. 46) .
. . "is so distrustful of reason that it instructs us to submit blindly
to a flow of events over which we can have little control" (p. 52). It
is easy to find passages in Hayek's writings, especially in his later ones,
which, taken by themselves, seem to support this interpretation. However, they
have to be seen in the context. Remember, for example, what Hayek wrote, after
his devastating attack on rationalist constructivism, in The Constitution
of Liberty:

The reader will probably wonder by now what role there remains to be played
by reason in the ordering of social affairs ... We have certainly not meant
to imply ... that reason has no important positive task. Reason undoubtedly
is man's most precious possession. Our argument is intended to show merely
that it is not all powerful ... What we have attempted is a defense of reason
against its abuse by those who do not understand the conditions of its effective
functioning and continuous growth ... What we must learn to understand is
... that all our efforts to improve things must operate within a working whole
which we cannot entirely control ... None of these conclusions are arguments
against the use of reason, but only arguments against such uses as require
any exclusive and coercive powers of government. (pp. 69-70)

Hayek is not generally distrustful of reason but he is not explicit about the
positive role which reason can play in the evolution and improvement of the
legal order. We are mainly told what reason cannot do and must not try to do,
and that reason is not a sufficient or necessary condition for progress to occur.
But Hayek does not deny that reason affects the evolution of social orders:

Our issue may now be pointed by asking whether ... human civilization is
the product of human reason, or whether... we should regard human reason as
the product of civilization. . . . Nobody will deny that the two phenomena
constantly interact. ("Kinds of Rationalism," in: Studies in Philosophy,
Politics and Economics, p. 186)

After all, human reasoning is nothing but the application of learnt rules to
new circumstances and in new combinations.

For Hayek, the distinguishing characteristic of a spontaneous order is not
that each or most of its rules have never deliberately been adopted but that
it is the result of a gradual and decentralized evolution:

While the rules on which a spontaneous order rests may also be of spontaneous
origin, this need not always be the case ... It is possible that an order
which would still have to be described as spontaneous rests on rules which
are entirely the result of deliberate design. (Law, Legislation and Liberty,
Vol. 1, pp.45-46)

Even more, Hayek calls for deliberate attempts to improve our rules of just
conduct:

Their gradual perfection will require the deliberate efforts of judges (or
others learned in the law) who will improve the existing system by laying
down new rules. Indeed, law as we know it could never have fully developed
without such efforts of judges, or even the occasional intervention of a legislator
to extricate it from the dead ends into which the gradual evolution may lead
it, or to deal with altogether new problems. (Law, Legislation and Liberty,
Vol. 1, p. 100)

Hayek certainly does not "instruct us to submit blindly to (the) flow
of events" as Barry suggests. But the reason for Barry's misunderstanding
is a general difficulty in interpreting Hayek: he is not careful to qualify
his statements in the immediate context. Hayek is a writer on the offensive
who rarely guards against misunderstanding and potential charges of inconsistency.
He trusts that the reader will give him the benefit of the doubt and interpret
separate statements of his as mutual qualifications rather than as contradictions.

Barry raises the important question whether the same process of spontaneous
evolution can be thought to apply to economic processes under a system of legal
rules and to the development of the legal rules themselves. I would answer that
individual behavior and customary or contractual arrangements in production
and exchange can be viewed as a private decentralized affair; however, an enforceable
legal order is a collective or public good. Since Hayek tends to neglect this
distinction, it seems reasonable to assume that he envisages the same type of
evolutionary process for both economic practices and legal rules: a process
that is driven by the interaction of human reason and random events and guided
by imitation and procreation of the successful. Human reason proposes, the survival
test disposes. Since legal rules cannot be tried by an individual on his own,
they must at first be tested in voluntary small-group experiments:

Voluntary rules ... allow for gradual and experimental change. The existence
of individuals and groups simultaneously observing partially different rules
provides the opportunity for the selection of the more effective ones. (The
Constitution of Liberty, p. 63)

What we wish to stress ... is ... the importance of the existence of numerous
voluntary associations, not only for the particular purposes of those who
share some common interest, but even for public purposes in the true sense.
(Law, Legislation and Liberty, Vol. 2, p. 151)

We therefore arrive at an implicitly contractarian explanation of the legal
order[1]: not constructivistic
or holistic contractarianism à la Rousseau but evolutionary or piecemeal
contractarianism.

In contrast, Hayek's ultimate normative criterion for evaluating a
legal order is not contractarian (this distinguishes him from James M. Buchanan,
for example). Nor is it true that Hayek regards the results of evolutionary,
undesigned processes as necessarily good (as Barry seems to believe; pp. 12,
45-46). For Hayek, evolutionary and decentralized procedure is expressly not
a sufficient but "merely" one necessary condition of progress (Law,
Legislation and Liberty, Vol. 3, p. 168). Another necessary condition is
that the chances of anyone selected at random are maximized:

Since rules of just conduct can affect only the chances of success of the
efforts of men, the aim in altering or developing them should be to improve
as much as possible the chances of anyone selected at random. (Law, Legislation
and Liberty, Vol. 2, pp. 129-30)

Indeed, this maximization criterion seems to be a logically sufficient normative
criterion which delegates the evolutionary (as well as any contractarian) principle
to the status of auxiliary test, an operational indicator.

Hayek's maximization criterion is a probabilistic version of rule utilitarianism.
It allows for the existence of risk (as did Bentham) and the need for rules
(as did John Stuart Mill). Curiously enough, Hayek rejects utilitarianism at
large in his more recent writings. In the mid-sixties, he had still called David
Hume's moral philosophy a "legitimate form" of utilitarianism ("Kinds
of Rationalism" in Studies in Philosophy, p. 88). Like any brand
of consequentialist ethics, probabilistic rule utilitarianism requires the use
of human reason - even if it is of the non-constructivistic type.

Norman Barry's bibliographical essay, "The Tradition of Spontaneous Order"
was both erudite and stimulating, and it will be an important source for all
who work in this area in the future. In reading it, however, I was struck by
certain obvious (but inevitable) gaps - most notable among which were Burke,
and Savigny and the German historical school. It also provoked a few reactions,
some of which I describe, briefly, below.

1. Interventionism and the Breakdown of Spontaneous Order in Smith and in
Hayek

1.1 Smith, Virtue and Commercial Society

Barry quoted Adam Smith on the fatal dissolution that awaits every state and
constitution whatever,'[1] but
he made no more of it than to say that 'the explanation of spontaneous order
in the noneconomic sphere may slip unintentionally into a kind of determinism.'
But the 'fatal dissolution' theme in fact goes with the concern about the 'inadequacies'
of a commercial system, and the misgivings about its impact on civic virtue,
that Barry discusses in connection with both Ferguson and Smith. It is all,
I think, most plausibly understood as the tail-end of the 'civic humanist' tradition,
stemming from the works of Polybius and Machiavelli, and then influential in
the work of many other figures in the history of political thought.[2]

The civic humanist tradition included the theme of the cyclical development
of constitutional orders, and of each 'good' constitutional form in time becoming
corrupt, and declining into its corresponding 'bad' form; but where there is
a possibility that this corruption, and thus the decline, might be halted through
the actions of a 'statesman.' This theme, it seems to me, is both echoed and
transformed not only in Smith and Ferguson's depictions of the disadvantages
of commercial society, but also in the interventionism that Smith produces in
response,[3] much of which may,
I think, be seen as an attempt to safeguard virtue in the face of the corrupting
influences of commercial society.

1.2 Hayek and the Self-Destruction of a Free Society

Barry rightly emphasizes Hayek's concern about the breakdown of a cosmos under
the impact of interventionism. What is not, perhaps, adequately stressed is
the way in which a free society could, on Hayek's account, be expected to break
down of its own accord.[4] For
Hayek, following Mandeville and Hume, emphasizes that a free society depends,
crucially, for its functioning, on arrangements (including both the market itself
and the legal order appropriate to it) some features of which will strike the
individual members of that society as unfair or undesirable. If they could understand
how these mechanisms function, Hayek thinks, they would see that all is for
the best. But Hayek, here following the Scottish Historical School, takes a
realistically skeptical view about the role of human reason in society. In Hayek's
view, the individual's compliance with these institutions was earlier achieved
through the influence of custom and uncritically accepted religious belief.
But the power of these has, Hayek thinks, been weakened by the development of
the market order itself - which, indeed, could be described as having created
the social preconditions for the possible practice of Hayek's false individualism.

Hayek believes that, for a free society to flourish - or even for it to continue
in existence - individuals must take up an attitude of 'humility'[5]
toward the various social forces and processes which they do not understand,
but which play a positive role in a free society. But how, on Hayek's account,
is it possible for them to know which are the forces etc. before which they
should be humble? Hayek certainly does not advocate a general attitude
of the passive acceptance of existing arrangements, and, in some areas, he is
all in favor of innovation and change. But how is the individual member of society
supposed to tell which elements of his heritage are to be conserved and which
overthrown? Here, Hayek seems to oscillate between a view which plays up the
role of ideas in society and the possibility of a rational understanding of
how society functions (at least for the 'intellectual'), and a view which emphasizes
the role of the customary, the traditional and the tacit. It is difficult to
see how any resolution of this problem can be offered within the compass of
Hayek's work, and I think that it is a more general problem for libertarianism,
too.

2. Methodology vs. Political Economy in Hayek

In his discussion on Hayek on 'The Free Exchange System,' Barry mentions the
way in which "in the work of G.L.S. Shackle and Ludwig Lachmann ... the
spontaneous emergence of order may only be a chance phenomenon;"
and he suggests that "In Hayek's early work on the theory of market process
... The assumption was that a catallaxy was leading towards equilibrium
rather than being moved away by endogenous factors."[6]

These ideas are crucial to Hayek's work - for just consider to what extent,
in his political writings, he rests his case on claims about what the market
order will deliver. Barry tells us that "there are certain identifiable
causal factors at work which bring about this equilibrating tendency, namely
competition and entrepreneurship."[7]
But do they actually do the trick, and can one show that a market
order will do what Hayek requires of it on the basis of his views about the
methodological foundations of economics? This seems to me very much an open
question, and one that it is a matter of some urgency for the friends of liberty
to answer.

3. Menger vs. Hayek on Spontaneous Order

Barry has, importantly, drawn attention to Menger as a theorist of spontaneous
order (as well as of methodology and economics), and he has also pointed to
the distinctive character of Menger's views here.[8]
Menger, one might say, stands between Savigny and the radical individualist.
He appreciates the historical school's emphasis on the undesigned character
of law, but he thinks little of their theoretical explanations of it, and, while
dismissing the 'pragmatism' of the radical individualists,[9]
he demands that our heritage from the past be submitted to critical scrutiny.

In describing these views, Barry takes pains to contrast them with those of
Hayek. But is this correct? For while, certainly, in some of Hayek's writings
he seems to speak as if the deliverances of various 'evolutionary' processes
should simply be uncritically accepted, this can be matched by passages in which
he demands that inherited legal institutions should be rationally appraised
to see if they do, indeed, comply with the requirements of a (classical) liberal
order. As these latter ideas are found notably in some of Hayek's earlier writings,
it might be tempting to suggest that there is a development in Hayek's views
here. But the two themes occur sufficiently often in writings of the same period,
or even in the same works, for it to be unavoidable, I think, for us to admit
that Hayek emphasizes both rational criticism and evolutionary themes at once.
And his plans for radical constitutional reform - emphasized in some of his
most recent writings - rule out the possibility that, in his later work, reason
becomes collapsed into 'evolutionary' social developments.[10]

It would seem to me, rather, that we must accept that both of these themes
are there (at least in parallel - as was also the case in Menger[11]),
and I would suggest that, despite their differences on many other points, our
best hope of an overall interpretation might be to follow up Hayek's references
to Popper's critical rationalism, which does offer us a promise that traditionalism
and the demand for rational critical scrutiny may be combined. [12]

Notes

[1] Barry, p. 28, citing Smith's
Lectures on Jurisprudence; note that this theme of the decline of all
constitutions is found also in the work of Hutcheson.

[2] Cp., on all this, J.G.A.
Pocock, The Machiavellian Moment, and, for some discussion of its relation
to Smith, D. Winch, Adam Smith's Politics.

[8] See, for further references
and discussion, and a fuller defence of the views advanced in this section,
my 'The Austrian Connection: Carl Menger and the Thought of F.A. von Hayek,'
in B. Smith and W. Grassl (eds.), Austrian Philosophy and Austrian Politics,
Philosophia Verlag, Munich, forthcoming.

[9] In which respect he is
very close to Hayek's dismissal of 'false' individualism.

[10] Compare here, however,
the contrasting claim made in E.F. Miller's most interesting 'The Cognitive
Basis of Hayek's Political Thought' in R.L. Cunningham (ed.), Liberty and
the Rule of Law.

[11] Note the way in which
the ideas in the text of the Untersuchungen and in Appendix
VII are, at least prima facie, in contrast with one another.

[12] In this connection, one
should look at Popper's 'Towards a Rational Theory of Tradition' in his Conjectures
and Refutations, and its parallels with his ideas about 'background knowledge,'
and the priority of 'dogmatism' over 'criticism' from a genetic point of view,
as brought out in Popper's autobiography Uended Quest, rather than the
more radical Open Society.

Jeremy ShearmurDept. of Government
University of Manchester, England

7. David Gordon, "Comments on 'The Tradition of Spontaneous
Order'"

Norman Barry's article "The Tradition of Spontaneous Order" (Literature
of Liberty, Summer, 1982) seems to me a most perceptive analysis: it is
easily the best survey of its topic which has appeared.

There are, however, one or two points at which I should be inclined to portray
matters differently from Barry. Before presenting these, however, I should emphasize
that these do not detract from my admiration of Barry's essay.

First, if a spontaneous order is defined as one that is not planned by a single
mind but, rather one that emerges from the coordinated actions of the actors
in a social system, it is not evident why only individuals can form such
an order. Suppose, contrary to methodological individualism, that there are
emergent laws for societies composed of more than a few individuals, which cannot
in principle be reduced to the actions (planned or unplanned) of the individuals
who compose that society. Why would the existence of such laws preclude the
existence of spontaneous orders derived from individual actions in just the
manner Barry sets out? I am not sure whether my last remark involves any difference
of opinion with Barry. He says, "It is a major contention of the theory
of spontaneous order that the aggregate structure it investigates are the outcomes
of the actions of individuals," (pp. 8-9). This does not claim that
the spontaneous order tradition rejects all social laws not conforming to the
requirements of methodological individualism: it is only that spontaneous
orders must be reducible to individuals' actions. Without criticizing methodological
individualism, I would question whether the truth of spontaneous order theories
rests on the truth of that methodology.

Another point, raised by Barry's excellent discussion of Carl Menger, is whether
the results which have arisen from a spontaneous order can also come about as
the result of consciously planned action. Menger, whose explanation of the origin
of money is a paradigm case of spontaneous order held, according to Barry, that
money need not arise by the spontaneous process he described: "Against
the rationalist explanation [that money arose by specific agreement] Menger
argues that, although money can and has come about in this way, the institution
can be accounted for by natural processes." (p. 32) There is an interesting
contrast here with Ludwig von Mises who in The Theory of Money and Credit
and Human Action maintains that money must arise by a spontaneous
process. Also, Hayek wants to say not only that production can be coordinated
spontaneously by the market but that a centrally directed economy is incapable
of such coordination.

The question then arises, does one want to make it a requirement of a spontaneous
order theory that the order which has arisen spontaneously could not have done
so otherwise? If one does, in what sense of "could not"? Must it be
logically impossible? And, if one does not impose such a requirement, must one
at least hold that a particular result is much more likely to have emerged spontaneously
than otherwise?

Raising this question involves no dissent from Barry's analysis. But at one
point he does seem to me to be in error. He distinguishes two sorts of explanations
of social structure that involve no reference to conscious design. "One
version shows how institutions and practices can emerge in a causal-genetic
manner while the other shows how they in fact survive." (p. 11)
As an example of what he has in mind, Barry contrasts a market system, governed
by the price mechanism, with the evolution of a legal system, in which "it
is not obviously the case that there is an equivalent mechanism to produce that
legal and political order which is required for the co-ordination of individual
order." (p. 11)

I fail to see why Barry thinks that evolutionary model doesn't provide a mechanism
for the emergence of spontaneous order. In the example of the evolution of legal
systems, the argument is that societies with legal systems which succeed in
coordinating individual actions will, other things being equal, have a greater
chance at survival than societies without such systems. Granted that some societies
have better coordinated legal systems than others at the start; differential
survival explains why the systems present in these societies will spread.

The mechanism here seems quite analogous to the price system, in which firms
which fail to produce what the consumers demand (or at least do so to a lesser
extent than others) tend to fall by the wayside. The emergence of a market order
where one does not exist, is also a process that takes time.

Perhaps Barry's argument, though, is that for the case of the legal system,
one hasn't been given explanation of the way in which the legal system that
eventually triumphs has arisen. (Just as in biological evolution the mechanism
of natural selection doesn't explain the emergence of genetic variance.) This
is perfectly true, but, once more, how is this case different for the price
system? The process of market coordination does not explain the original pricing
and output decisions of the firms in an economy. It explains, rather, why firms
which have made the "right" decisions supplant those which have not.

Barry is of course right that the legal system that emerges through "survival
of the fittest" may not be conducive to classical liberalism (or at least
one needs some argument to show that there must be such a correspondence. One
possibility is that since market economies tend to survive better than non-market
societies, which cannot coordinate the knowledge in society, a legal system
conducive to market order will have a significant evolutionary advantage.) But
this does not show that there isn't a mechanism for the emergence of a legal
order (I'm not clear whether Barry intends to deny this in his discussion on
pp. 11-12).

Finally, Barry successfully avoids a frequent error about the relation of spontaneous
orders to ethics. He says, "There is, of course, implicit in all the writers
in this tradition the notion of an ethical payoff: that is, we are likely to
enjoy beneficial consequences by cultivating spontaneous mechanisms and by treating
the claims of an unaided reason with some skepticism." (p. 11) The argument,
in other words, is that spontaneous orders lead to better results: it isn't
that a spontaneous order is, as such, ethically superior to planned order.

This may seem obvious, yet I have heard it argued that if the minimal state
of Robert Nozick's Anarchy, State, and Utopia arose through a non-spontaneous
process (e.g., people agreeing to cut down an existing state) its moral validity
would be placed in question. It isn't at any rate obvious why a conscious agreement
is morally inferior to a spontaneous order. It might be said that with a spontaneous
order, at least one knows that the actions of the constituent individuals haven't
been coerced. But this is wrong: why can't coerced actions be the subject of
invisible-hand explanations? And agreements, on the other side, can be entirely
voluntary. Barry evidently disagrees with the first part of this, as he apparently
(p. 11) makes it a requirement of a spontaneous order that it operate on uncoerced
actions. But he gives no reason for this.

In conclusion, Professor Barry is to be congratulated for his outstanding article.
To readers of his previous works, the excellence of the present essay will come
as no surprise.